Government Machinery for

Indian Industrial
Economy**(P56)
We live in 2010 +++
Therefore :Forget the study
material for Govt. Machinery
 For Government Machinery
(P56)**

 http://goidirectory.nic.in/index.php
 http://india.gov.in/

 Last Updated: Dec 1, 2010

 Ministry of Commerce and Industry

2
 Understanding the legal
environment of Business(P 60 )**
 Type: Google
 business legislations in India
 http://business.gov.in/
 http://business.gov.in/legal_aspects/indl_act
s.php

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 You will find – click on each
 Industrial Acts and Legislations
 Laws Relating to Intellectual Property
Rights
 Key Regulations
 Arbitration and Conciliation
 Laws Relating to Specific Industries
 Laws Relating to doing Business Abroad

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 Read
 Learn ! Learn ! Learn !
 Find out – for example
 SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2009
  Securities Contracts (Regulation)
Amendment Act, 2007

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 Department of disinvestment
(MoF)
 What do they do?

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 Read India and IPR
 Copyrights and related rights –
 Trade Marks
 Geographical Indications
 Patents-
 Industrial Designs
 Lay out Designs of Integrated Circuits
 Protection of Undisclosed Information (Trade
Secrets)
 Plant varieties- 'sui generis' system
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 Google out

 Capital Market legislations in India

 http://business.gov.in/business_financing/capit
al_market.php
 Enjoy Reading

Live Smart !!!!

8
Changing role of
Government
Unit 3

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 Positive vs normative roles
 What the state actually does vs what it
ought to do
 Welfare state

10
 Economic systems –revisited
 Capitalism vs communism (socialism)
 Laissez faire –free market economy without
government intervention

 Pareto optimal allocation**

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 Why laissez faire cannot work?
**
 Unrealistic assumptions such as :
 Perfect competition
 Absence of externalities
 Public goods –who will provide ? Only less
than optimal will be produced.

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 Non-rivalrous And Non-excludable
 (Private Goods - Depletability/
Excludability)

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 Why laissez faire cannot work?
**
 Lacunae in performance
 Cyclical fluctuations
 Inequalities

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 More -
 Inadequate provision for future
 Less development in the absence of
governmental action
 Intergenerational equity
 Environmentally sustainable development

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 Heavy capital investment with delayed
returns
 Long gestation period
 High risks
 Nature of public goods with positive
externalities
 Institutional constraints
 Infrastructural constraints
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 Private cost benefit analysis does not
include environmental impact analysis
 Vedanta?

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 Myth or Reality?
 With the expansion of the market in
transitional economies, the role of the state
would decline

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 Globalisation leading to transformation
of the world into a global village.

 Increasing disparities.

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 Increasing awareness about human
rights.
 Emergence of powerful technological
solutions-computers and IT.
 Increasing expectations from the
Governments to ‘perform’.

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 The impact of the information
revolution
 Increasing demands from citizens for
improved accountability and
transparency

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 The needs of economic reform
 The increased impact of globalization;
 State formerly interventionist, producer,
regulator and seller now called upon to be a
facilitator, promoter, and partner.

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 Socialism/Communism
 Socialism: means of production, capital,
land, raw materials, and factories, should
be owned or controlled by the society either
directly or through the government.

 Social equity at the expense of wealth

generation??
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 Then, why not communism?**
 Ignore consumer preferences
 Difficulty in material balancing
 Input bottlenecks
 Trial and error method
 Mixed priorities
 Technology constraints due to lack of
incentives

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 More-
 The state monopolies
 Bureaucracy
 Lack of competition
 Absence of profit motive
 Lack of incentives

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 INTERVENTION?

 Refers to - Controls and regulations

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Why Government intervention ?

 Capitalist or socialist – The Government

sponsors economic growth
 Government alone can initiate and execute
economic planning
 State participates in economic activities by
entering directly into economic and
commercial activities
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 Why Government intervention?
 State has the responsibility to lay strong
base for future development of industry –
eg all types of infrastructure
 Responsibility for developing core
industries
 Market failure – government should
intervene

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 Public goods with beneficial externalities
 Reduction in interpersonal inequalities
 Poverty removal
 Technological progress-R&D
 Control cyclical fluctuations

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 Types of intervention
 Formal and informal
 Coercive and inducive
 Promotional and regulatory
 Direct and indirect

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 Effect
 Make competition work-Competition act
 Set standards for competition-government
competes with business firms

 Supplement competition-Direct ownership

and operation by government

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Controls have negative consequences
 Expansion of bureaucracy and wastage of
valuable resources -??
 Less capital formation and investment
 Waste of time – procedures- delays – eg.
Licenses
 Complexity in decision making
 Less flexibility

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 More -
 Emergence of corruption –rent seeking
/DUP activities

 Block private initiatives

 Governments may make bigger mistakes

than markets

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